Chapter 6 Cloud Computing Industry

Transcription

1 Emerging Industry Insights Cloud Computing Industry Chapter 6 Cloud Computing Industry ITIS Program, MIC/III Introduction Cheng-Chieh Huang The cloud computing industry is very broad in scope and encompasses industries such as IT hardware and IT software services. If the data center for providing cloud services is used as a reference point then it can be divided into two sectors: one is the Cloud Technology industry that helps the data center enable data services; the other is the Cloud Service industry that uses the data center infrastructure to provide services to businesses or consumers. Generally speaking, the cloud computing industry can be considered to be technologies and services that enable the user to access IT resources and services over the network. The scope and links of the cloud computing industry are shown in Figure Data Center Equipment Industry Storage Server Equipment Terminal Equipment Industry Notebook Smart Phone Networking Equipment Peripheral Equipment Data Center Software Industry Virtualization Software Storage Software Cloud Technology Industry Operations Software Billing Software Cloud Service Industry System Integration and Consulting Services Industry IT and Business Consulting System Integration Services Cloud Service Provider SaaS PaaS IaaS Data Center Operator Figure Source: ITIS Program, MIC/III (2010/12). Relationship Diagram for the Taiwan Cloud Computing Industry 399

2 2011 Taiwan Industrial Outlook The cloud computing concept has had a major impact on the products, services and business models of the IT software and hardware industries. Cloud computing has therefore become the emerging concept and technology that has drawn the most attention from the IT software/hardware industries in the wake of the 2008 financial crisis. The sheer scope of the industry as well as the fact that it spans both the enterprise and consumer markets has led to much discussion on its future business potential as well. Nevertheless, cloud computing technologies, services and business models as well as the new products, services, competition and alliances that arise as a result present an emerging market that is well worth monitoring. Overview of the Cloud Computing Industry in 2010 As shown in Figure 3-6-2, hardware makers in the cloud technology industry account for the majority share of cloud computing-related output in Taiwan through notebooks, smart phones, servers, disk arrays and the like. In 2010, the total cloud technology industry output in Taiwan was USD 99.3 billion. By 2011, this is expected to grow by 19.2% to reach USD billion. The main source of growth is the increase in consumer demand for smart phones with the easing of the financial crisis, as well as the continued demand for notebook computers. Data center equipment such as servers and disk arrays have also benefited from the global demand for cloud services to grow by 15~20% as well. Unit: USD Million 180, , , , ,000 80,000 60,000 40, % 26.3% 25.0% 27.6% 19.2% 18.1% 28.9% 15.9% 20, (e) 2011(f) 2012(f) 2013(f) Cloud Technology Industry 78, , , , ,957.8 Cloud Service Industry Annual Growth in Cloud Service % 25.0% 27.6% 28.9% Annual Growth in Cloud Technology % 19.2% 18.1% 15.9% 35% 30% 25% 20% 15% 10% 5% 0% Note 1: The cloud technology industry statistics include notebook computers, smart phones, servers, disk arrays, networking equipment and system integration services. Note 2: The cloud service industry includes: SaaS/ PaaS/ IaaS/ hosting services. Source: ITIS Program, MIC/III (2010/12). Figure Taiwan Cloud Computing Industry Output,

3 Emerging Industry Insights Cloud Computing Industry In the cloud service industry, Taiwan s industry output in 2009 came mainly from IaaS hosting services and totaled USD million. In 2010, the launch of new cloud products & services as well as business demand for introduction of virtualization services and cloud service trials saw the market grow to USD million, an increase of approximately 27.9%. In 2011, the industry should continue to grow and reach USD million, an increase of 25%. From an industry development point of view, 2010 was the test period for the cloud service industry. All the vendors have tried to develop new products or platforms or build upon their old products or platforms based on their individual niches or cloud computing opportunities. Generally speaking, 2010 developments were mainly driven by businesses using virtualization technology to set up an internal private cloud. In cloud services, the development of existing platforms and customer groups offer more immediate gains. Trends in Global Market and Technology Development Data Center Equipment Cloud computing data center solutions vendors such as IBM, HP and Cisco + EMC + VMware are aggressively investing in data center virtualization equipment and system management software as well as the overall design of next-generation cloud computing centers. Microsoft is also aggressively promoting its virtualization software and system management software in a bid to catch up to the top three. The solutions providers have defined three main targets for the future development of the data center: Flexibility, Virtualization and Lean Resources. Virtualization Software Current virtualization software can be divided into five types according to the resource being virtualized: (1) Application virtualization; (2) Desktop virtualization; (3) Server virtualization; (4) Storage virtualization; and (5) Network virtualization. The compound annual growth rate (CAGR) for the global virtualization software market is projected to reach 23.1% between 2009 and Analysis indicates that the main factors driving growth in the virtualization software market include: (1) Optimizing the utilization of idle hardware resources to reduce the cost of hardware purchases for businesses/data centers; (2) The reduction in hardware servers translates into lower electricity, cooling system and server space costs; (3) Reduction of software licensing and maintenance costs; (4) Simplifying IT administration for the business or data center; (5) Centralization of resources reduces the number of backup servers needed and simplifies post-disaster recovery; (6) Enables rapid deployment of new applications. 401

4 2011 Taiwan Industrial Outlook Other Data Center Management Software Other types of management software have also continued to develop at the same time as virtualization software. Examples include: (1) Workload management software: Can be used to monitor the allocation of computing resources to each application as well as how much server, storage and networking resources are available; (2) Provision management: Automatically allocates resources to certain applications or servers based on a pre-defined policy. These types of management software must work closely with the virtualization software to ensure the proper management and allocation of all resources. There may also be demand for other types of management software including system management (e.g. HP OpenView) for monitoring the state of server/network resources and fault detection, billing software used for calculating cloud service resource usage fees and security management software. System Integration and Consulting Services Realizing the complexity of processes involved in cloud computing software, hardware and services as well as data center management has led to demand for system integration and consulting services. Cloud consulting services mainly involves providing business- or IT-oriented consulting services. Cloud system integration services are now developing in two directions. The first involves helping the customer move their internal data into virtualization software, the adoption and integration of new hardware, and modifying the existing software so it conforms to the virtualization architecture. The second direction is assisting the customer transplant their existing software and hardware to the data center of the remote cloud services provider. Cloud Services The cloud service industry s CAGR for the 5-year period between 2009~2013 is expected to reach 37.7%. If the SaaS/PaaS/IaaS markets are analyzed separately then in 2010, SaaS was worth around USD 11 billion, PaaS was worth around USD 1.88 billion and IaaS was worth USD 2.3 billion. The SaaS market was therefore the largest in 2010, followed by IaaS and then PaaS. IaaS, however, boasted the highest growth rate with a CAGR of 50.5%. The growth potential of IaaS is therefore attracting much interest. Current trends suggest that IaaS services have a very broad target market. Many SMEs use IaaS services directly for routine computing and storage while some large enterprises may also use it for off-site backup or to meet a temporary demand for computing resources. SaaS and PaaS cloud 402

5 Emerging Industry Insights Cloud Computing Industry service providers may also adopt IaaS services to offer more flexibility in how they provide services to the customer. As a result, IaaS s CAGR is expected to surpass 50%. Developments in the Taiwan Cloud Computing Industry in 2010 Network Service Operators The most proactive network service providers in the Taiwan cloud computing industry in 2010 were telecommunications/data center operators such as Chunghwa Telecom (CHT), FarEasTone (FET) and Acer edc. The moves made by these key vendors in 2010 can be summarized as: (1) Preparing data centers for virtualization so they are ready to support cloud services; (2) Progressively providing cloud and SaaS trial services. (3) Attempting to help businesses set up industry-specific cloud services such as medical cloud services. Server Industry Vendors The moves made by Taiwan server industry vendors in 2010 can be summarized as: (1) R&D into container computers for cloud data centers; (2) Development of low-energy servers; (3) Investment in other potential terminal platforms such as medical electronics and wireless sensing chips. Terminal Equipment Vendors In 2010, Taiwan s terminal equipment industry including NB/PC and smart phone makers began prepping their cloud service offerings as well. Examples include: (1) Bundling cloud printing services and online applications markets with notebooks for sale; (2) Development of front-end platforms such as E-readers and medical terminals. Software and Service Vendors In 2010, Taiwan s software and service vendors began launching a variety of different cloud related technologies and services in the second half of the year. These technologies and services can be summarized as follows: (1) Vendors that converted an existing platform over to cloud services, e.g. electronic transaction platform, financial transaction platform; (2) Provision of virtualization software/hardware integration and consulting services by HP server, IBM server and EMC storage equipment vendors. (3) Gradual development and replacement of existing software by cloud software service. (4) Sale of proprietary software in collaboration with data centers (e.g. data centers in Japan and China). 403

6 2011 Taiwan Industrial Outlook Important Issues in the Cloud Computing Industry IT Issues IT security and privacy remain the most important concerns for businesses in Taiwan and overseas according to surveys about the adoption of cloud computing. Cloud computing currently faces five major potential IT security threats: (1) Connection stability; (2) Content of the service contract; (3) Security issues with virtualization; (4) Controlling cloud data access; (5) There is no unified standard for cloud security at the moment making it impossible for businesses to assess how well data in the cloud is protected. Cloud service providers or data center operators must provide rating information on IT security and data center management to convince businesses to adopt cloud services. Cloud data center operators should also provide transparent information about their operation status for customers to monitor at any time. Cloud Computing Standard Cloud computing is based around the concept of resource sharing and flexible resource usage. However, the standards for governing how data center equipment, virtualization software, system management software and even how cloud services should interact with each other have not yet been defined. Incompatibility between different technologies, software and services will inevitably become a major obstacle to the rapid development of cloud computing and cloud services. There are currently two schools of thought. Some vendors believe that a common standard is necessary for the development of cloud computing while other vendors believe that proprietary systems are necessary for improving the usability of cloud computing. As a result, the major cloud computing technology solutions providers such as IBM, HP and Cisco + EMC +VMware are all separately developing compatible equipment and software with their own software and equipment partners. Independent software vendors such as Novell and Red Hat are in turn laying the groundwork in cloud computing virtualization and system management software in the hope of promoting open standards for cloud computing. Development of Innovative Services Data center operations, data center equipment/software or terminal equipment products are all dependent on innovative new services and business models to persuade businesses or consumers to adopt the emerging services. This in turn translates into vibrant development for products and 404

7 Emerging Industry Insights Cloud Computing Industry services. As far as innovative cloud services are concerned, there is still no killer application model for supercharging the development of the cloud service industry and in turn, the development of the cloud technology industry. The emerging business model that has attracted the most attention so far is the integration of the iphone smart phone with the App Store for software downloads. Whether this model can be expanded to other smart devices or the enterprise market remains to be seen. Generally speaking, innovative cloud services come from three sources: integration of smart devices with software services, flexible resource usage and sharing & collaboration services. Innovative service development will come once the application gaps between these three directions have been filled in every industry or domain. New Products and Technologies in the Cloud Computing Industry Data Center Equipment Data center equipment consists mainly of servers, storage equipment and network communications equipment. Server vendors in Taiwan mainly manufacture x86 CPU-based servers. The nature of the application software running on the server may also influence the development of the server product. If cloud services continue to be taken up by businesses or consumers then applications such as Web browsers, programs, collaboration software and virtual desktops that are the most likely to be placed in data centers should see rapid growth. These are all applications that x86 CPU-based servers are most suited to handle, and will provide the Taiwan server industry with a strong advantage. In addition, cloud computing means that data centers may also adopt servers that can be quickly deployed to expand or reduce resources as required. Container servers or appliance servers are therefore another potential avenue of development. As for storage equipment, Taiwan has several vendors that ship disk array products around the world. The rapid development of cloud services will trigger demand for data storage and should generate high demand for disk arrays. Disk array vendors in Taiwan are also working closely with virtualization software vendors to develop virtual disk array technologies for use in data center solutions. In network communications, Taiwan s main network communications equipment makers have a higher market share in the Home/SOHO market. Future product development should therefore concentrate on the small/medium-sized data center market and virtualization technology to exploit the trends towards cloud technology. 405

8 2011 Taiwan Industrial Outlook IT Security Software and Service The following IT security products have the potential to be developed to counter IT security threats posed by cloud services. First, vendors may develop a cloud management platform that integrates the data of business customers in a flexible manner and helps optimize their corporate IT resources. In other words, the real and the virtual will be integrated with an emphasis on improving the security after virtualization. The second is cloud-side safety such as protecting data during transmission, backup, encryption and leaks, or data destruction, terminal protection and security monitoring services. The third is post-event recovery. IT forensic software allows businesses to show proof that all the proper measures were taken with at-risk data in order to reduce or avoid compensation claims. The development of third-party verification can also be considered for inspecting the provider s level of protection. An analysis of Taiwan s development options in cloud IT security suggests that Taiwanese vendors enjoy better odds when it comes to hardware and software integration. For this reason, integrated software/hardware that combines data backup, transmission and leak prevention functions offers better development potential. Virtualization Software and System Management Software Virtualization software and system management software have always been a key area of development for large system software vendors such as IBM, HP, EMC/VMware and CA. Taiwan companies are not their competitors in this particular field. The push for interoperable cloud technology standards, however, means that virtualization software and management software based on an open software platform standard may be worth developing. The market implications are two-fold: the first is to capture a slice of the small/medium-sized data center market; the second is to help to integrate the software and services from different proprietary platforms under an open platform. Development Trends for the Cloud Computing Industry in 2011 Data Center The cloud computing trend means that the Taiwan data center industry can expect growth of over 20~30%. With large enterprises in Taiwan still cautious about adopting cloud services, however, Taiwan s data centers should concentrate not only on encouraging cloud service adoption among SMEs, but should also develop other businesses as well, including helping Taiwanese 406

9 Emerging Industry Insights Cloud Computing Industry companies to move their data back to Taiwan due to data security concerns. Multinational and Chinese enterprises may also be persuaded to choose a data center in Taiwan as their secondary remote backup site. Instead of passively storing enterprise data, data centers should be proactive in developing innovative services and service models. Servers The Taiwan server industry has two main channels. The first is large brand-name vendors such as those doing ODM work for Dell. The other is the non-branded market vendors for motherboards. These mainly provide customized solutions targeted at large portal websites. The rise of cloud computing means that in addition to strengthening their existing ODM channels and carrying out joint R&D with large vendors on virtualization equipment the Taiwan server industry should be more proactive about developing customized channel markets as well. A particular emphasis should be placed on the development of emerging cloud data center/telecommunications operators. In China for example data center/telecommunications infrastructure is growing rapidly making this a new channel and market well worth development. Terminal Equipment A significant number of terminal equipment vendors in Taiwan are now competitive internationally and have their own well-known brand as well. Apart from following the leading global vendors in developing smart phones, tablet PCs and E-readers, they should also think seriously about new business models that will combine service and software with terminal equipment. The data center/telecommunications industry is also a channel that has been neglected in the past and so should be well worth pursuing in the future. Software and Service The global economy entered the recovery phase in 2010, so business investment in IT has revived as well. While Taiwan s software and service vendors only account for a very small part of the global market, they do possess mature capabilities for system integration and customization. When it comes to new opportunities in cloud computing, apart from supporting the creation of virtualized data centers, Taiwan s software and service industry operators should actively invest in converting industry- or process-specific software services over to cloud. B2B, taxation, medical and financial transaction platforms are all examples of mature application processes or well-developed integrated systems. 407

10 2011 Taiwan Industrial Outlook Conclusions Cloud computing has become an important concept and technology that has changed the face of the ICT software/hardware industry in the wake of the 2008 financial crisis and now offers the Taiwan ICT software/hardware industry a new direction for future development. While cloud computing still has problems such as IT security concerns and industry standards to overcome, the development of innovative services, the integration of software and hardware as well as flexible resource usage all provide a clear direction for further development. The Taiwan ICT software/hardware industry should think about how software and services can be combined through cloud to create innovative new products, services and business models. At the same time, they should think about the entry strategy for new markets and channels generated by cloud computing. The ICT software & service industry in Taiwan should leverage the development of cloud computing to combine their existing software/hardware integration capability with knowledge of mature industry-specific applications to create new service models. In 2011, the top IT software vendors, IT hardware vendors, network services providers and telecommunications operators will continue to actively develop new cloud computing products and markets. The ICT software/hardware vendors in Taiwan should therefore also actively develop new products and services as well as look at the options for developing new channels and markets. Year NTD/USD Note: Exchange rate of USD to NTD 408